As Multinationals Run the Taps, Anger Rises Over Water for Profit

By JOHN TAGLIABUE

Published: August 26, 2002

SAN ISIDRO DE LULES, Argentina — When Jorge Abdala's water bill jumped to 59 pesos a month from 24 a few years ago, he went looking for someone to blame. He soon found his villain: a French multinational company at the forefront of a global effort to privatize government-run water systems.

Mr. Abdala, a soft-spoken 54-year-old, scarcely seems the revolutionary. Scrambling for a living like most of his neighbors in this sprawling town tucked up under the Andes, he runs a meager catering business out of his kitchen.

But the protests Mr. Abdala organized here forced the company, now known as Vivendi Environnement , to abandon its long-term contract to overhaul and manage the waterworks of the Tucumán Province, where Mr. Abdala and roughly one million other Argentines live.

"Our main demand was, simply, `Go home!' " he said, shifting to the edge of his seat in the living room of his simple one-story home. "We kept presenting facts showing that they were not making any investments, just raising the price of water. And any investments they made were with government money."

Vast numbers of people have also demonstrated in Bolivia, in Ecuador, in Panama, in South Africa and elsewhere in a vivid illustration of how highly charged the economics of water have become. At issue is this question: should water, a substance close to life itself, be a profit-making business?

The backlash in Tucumán continues today as the province struggles to find a new company to operate its aging water system. The reaction is still being felt by the big European concerns that dominate the world water business and the Western aid institutions that support privatization.

Already, corporations own or operate water systems across the globe that bring in about $200 billion a year. Yet they serve only about 7 percent of the world's population, leaving a potentially vast market untapped. Protesters are determined to limit that market.

The protests have heartened the companies' critics, mainly environmentalists who oppose globalization, but also consumer groups and labor unions. They all object to private enterprise making a profit on water.

"Water is a resource essential to life," said Hannah Griffiths, of Friends of the Earth, an environmentalist group based in Britain. "Decisions about allocation and distribution should be democratic and based on everyone's fundamental right to a clean, healthy supply."

Not all agree. Some argue that unless water is treated as an increasingly precious commodity and priced to reflect its value — particularly for heavy users like farmers and factories — much of it will be wasted.

It also often takes more money than some governments are willing or able to spend to improve the systems that deliver fresh water to cities and towns around the world, especially to the poor.

But will allowing private enterprise to manage or own many of the world's water systems help overcome those problems? And will it expose the poor to impossibly high water bills?

The widespread inability of public utilities in the developing world to provide clean water is one of the strongest arguments in favor of privatization.

"As a general rule, they're heavily overstaffed, provide poor quality, are unwilling or unable to invest, with not enough money to serve everybody," said John Briscoe, senior water adviser at the World Bank in Washington, referring to public utilities.

But private enterprise appears to be no panacea. Here in Tucumán, Vivendi's critics say that the company recklessly pursued the contract in order to break into the market and that most of the problems it encountered were of its own making.

To Gilda Pedinoce de Valls, a former state's attorney in Tucumán, Vivendi failed to recognize how strongly people feel about tampering with the substance essential to sustaining what has long been a dusty region noted for its citrus fruit crop.

Water, she said, "is a gift from God."

Olivier Barbaroux, the president of Vivendi's water business, agreed — but only up to a point.

"Yes," Mr. Barbaroux said, "but he forgot to lay the pipes."

More Water, but No Sewers

When water filled the cellar under Basilio Sajnik's pizzeria in downtown Lomas de Zamora, a sprawling suburb of Buenos Aires, he, too, looked for a culprit.

Like Mr. Abdala, he found a leading French multinational. That company, Suez, along with Vivendi has led the push to privatize water management.

In 1992, Suez signed a 30-year contract to manage the water around Buenos Aires. Lomas, a sprawling low-slung city of 600,000 on the capital's southern edge, is home to many of the 2 million people that Suez provided with water for the first time.

But the company was slower to install sewers. Now the cellar under the three-family building that houses Mr. Sajnik's pizzeria is permanently flooded. A pump runs seven days a week.

"It's the third pump I've purchased, yet nobody pays me for the electricity" Mr. Sajnik, 58, said recently as he waded in dirty water almost to the top of his knee-high boots.